Viatical Settlement Companies

There are different types of life settlement companies you should be aware of if you’re considering selling your life insurance policy. Let’s explore these types of life settlement companies in detail to help you make the best decision possible.
life settlement companies

What is a viatical settlement company?

Since we already covered the basics of life settlements, we won’t redefine it but feel free to go back if you’re interested.

There are two types of life settlement companies and each plays an important role in a life settlement transaction. They are called life settlement providers & life settlement brokers. Let’s review each with a list of list of the top settlement companies.

Vitical Settlement Providers

Life settlement providers are specialty companies that are licensed to buy life insurance policies from senior citizens over 65 years old who decide to sell them. Providers represent the secondary life insurance market similar to how Fannie Mae represents the secondary real estate market. Providers are the companies who purchase the life insurance policies, unlike brokers who facilitate the transactions much like a real estate agent sells a home. Life settlement providers typically make one offer to a seller. If the seller accepts the one offer, the provider becomes the new beneficiary (the previous beneficiaries are removed) and collects the death benefit upon the insured passing. Providers take the risk by paying all future premiums and as they are for-businesses, their goal is to maximize their earnings and thus buy a policy as low as possible. Sellers can be at a disadvantage working directly with a life settlement provider because the buyer has no fiduciary duty to the consumer’s best interest. The consumer has no idea if they are receiving fair market value for their life insurance policy. That’s where a life settlement broker ensures the policy seller is getting a fair value for the sale of their policy. We will list the top life settlement providers below but first, let’s highlight the role of a broker.

Viatical Settlement Brokers

Life settlement brokers are licensed life settlement companies or individuals who legally represent the seller of a life insurance policy in a life settlement transaction. As mentioned, settlement brokers are like real estate agents but instead of selling homes, they help you sell your life insurance policy for the highest possible amount. They maximize the payouts by auctioning the policy among the top life settlement providers to achieve the highest sales price. Unlike providers, brokers make commissions only when a policy is sold (if the seller accepts an offer). A good life settlement brokers earn their weight in gold. They ensure their clients are saving time by streamlining the process and negotiating the highest price that exceeds their client’s expectations.

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Top 10 Viatical Settlement Companies List

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coventry provider
Bridge life settlements
Abacus provider
Lisa
birkshire provider
Life settlement app
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birkshire provider
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Comparing Viatical Settlement Companies

Deciding which life settlement company to sell your life insurance through is a matter of preference. Do you want to sell your policy directly to a provider or use a broker to help you sell it. Both companies have their pros and cons. We listed additional life settlement companies below for you to consider as well.

Infographic comparing life settlement companies, brokers vs providers.

Viatical Settlement Providers

Life settlement providers are specialty companies that are licensed to buy life insurance policies from senior citizens over 65 years old who decide to sell them. Providers represent the secondary life insurance market similar to how Fannie Mae represents the secondary real estate market. Providers are the companies who purchase the life insurance policies, unlike brokers who facilitate the transactions much like a real estate agent sells a home. Life settlement providers typically make one offer to a seller. If the seller accepts the one offer, the provider becomes the new beneficiary (the previous beneficiaries are removed) and collects the death benefit upon the insured passing. Providers take the risk by paying all future premiums and as they are for-businesses, their goal is to maximize their earnings and thus buy a policy as low as possible. Sellers can be at a disadvantage working directly with a life settlement provider because the buyer has no fiduciary duty to the consumer’s best interest. The consumer has no idea if they are receiving fair market value for their life insurance policy. That’s where a life settlement broker ensures the policy seller is getting a fair value for the sale of their policy. We will list the top life settlement providers below but first, let’s highlight the role of a broker.

Viatical Settlement Brokers

Life settlement brokers are licensed life settlement companies or individuals who legally represent the seller of a life insurance policy in a life settlement transaction. As mentioned, settlement brokers are like real estate agents but instead of selling homes, they help you sell your life insurance policy for the highest possible amount. They maximize the payouts by auctioning the policy among the top life settlement providers to achieve the highest sales price. Unlike providers, brokers make commissions only when a policy is sold (if the seller accepts an offer). A good life settlement brokers earn their weight in gold. They ensure their clients are saving time by streamlining the process and negotiating the highest price that exceeds their client’s expectations.
  1. Must have proven terminal or chronic illness
  2. Policies must be at least 2 years old
  3. The face value or death benefit is generally above $100,000
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If you think you may qualify for a viatical settlement, the next steps would be to provide authorizations to start the underwriting process. Your viatical broker helps facilitate your auction application. Here are the signatures required;
  1. HIPPA: Allow access to 3 years of medical history.
  2. Life Release: Allow carriers to provide policy copy and illustrations.
  3. Disclosure: Agreement to terms of service.
  4. Closing Documents: If an offer is accepted.

Viatical Pros & Cons

Selling a policy is a big decision that should not be taken lightly. It’s important to weigh the benefits with the costs to determine if a viatical can help you.

PROS

  • Help cover medical or end-of-life expenses.
  • Improve the quality of life for yourself and others.
  • Keep the original intent of the policy.
  • Pocket future premiums.
  • Possible tax-favored benefits for end-of-life and long-term care rollover.

CONS

  • Beneficiaries will not receive the full death benefit.
  • Possible Medicaid ineligibility.
  • Your creditors can claim proceeds.
  • The process takes time & paperwork.

Weigh Your Options

Is a viatical settlement your best option? It should not be a hasty decision. Here are some reasons why people sell their life insurance policy & alternative options to consider;
  • Keep the policy.
  • Check if your policy has Accelerated Death Benefits (ADB).
  • Consider a policy loan if possible.
A cancer patient laying down with viatical company logo

Choosing the Best Viatical Settlement Company for You

Selecting a top viatical settlement company is crucial to getting the best offer for your life insurance policy. Make sure you are working with a licensed, reputable viatical company. Here are the types of viatical companies you should know exist;

VIATICAL PROVIDERS

Providers are specialty licensed viatical companies who ultimately purchase your life insurance policy. They are the ones making the offers. They represent multiple funds owned by institutional investors. They buy large portfolios and are not considered with any one policy. Providers are NOT fiduciaries and their goal is profitability. It is not in the consumer’s best interest to work directly with a viatical settlement provider! However, providers are the trusted source of liquidity and are held to a high ethical standard.

Top Viatical Providers

  • Coventry & Coventry Direct
  • Abacus Life


VIATICAL SETTLEMENT BROKERS

Unlike providers, viatical brokers are licensed agents who have a legally bound fiduciary duty to their client’s best interest. Think of a viatical broker like a real estate agent. Brokers are paid a fee to represent the seller and list the policy at auction among the top providers competing to buy a policy thus creating fair market value. The goal is to negotiate multiple offers increasing the payout amount and exceeding their commission. Viatical brokers have been known to charge excess fees so make sure they can justify the cost accordingly.

Top Viatical Settlement Brokers

  • Bridge
  • American Life Fund
  • Life Insurance Settlements


VIATICAL MARKETING COMPANIES

There are lots of marketing companies posing as top viatical settlement companies but are not licensed and often serve providers to generate customers. Do your research and ask if they are a licensed entity.

Understanding the Process & Taxes

As mentioned, viatical settlement transactions are similar to real estate or selling a home. The average policy sale can take 3-6 months to close before proceeds are paid out. Tax to your tax & financial advisor to plan the proceeds appropriately. Assuming you’re eligible and have an idea of what viatical company you want to work with, here is a process outline and some tax considerations;

VIATICAL SALES PROCESS

  1. Application
  2. Offer(s)
  3. Closing
  4. Transfer Funds

VIATICAL TAX CONSIDERATIONS

  1. You’re typically not taxed on the amount you paid into the policy called your cost basis (see examples below)
  2. Viaticals are considered tax-free for terminal illnesses and/if rolled into a long-term care or other medically necessary vehicles
  3. Not tax advice: Check with your tax professional, state and federal tax offices.

Real Life Examples

Better understand how viaticals work with these case studies;

MEET JIM

Jim was 58 when he was diagnosed with renal kidney disease. The best hospital for him was out of state, he was self-employed and the costs incurred made him contemplate selling his family home. After doing a bit of research on illness financial options, Jim learned about viaticals and realized he had a renewable term policy for $250,000. He contacted a viatical settlement broker who was able to help Jim successfully sell his policy for $50,000 to help cover costs and keep his home.

MEET JILL

Jill was a stay-at-home mom with a husband and three children when she found out she was diagnosed with a life-threatening cancer. Jill had a $300,000 whole-life policy with only $20,000 in cash value. She was able to sell her policy for $160,000 and spend her final days enjoying her family like never before.

“Never lose infinite hope”

– Martin Luther King, Jr.

FAQ’s

Who benefits from a viatical settlement?

Those who benefit from a viatical settlement include the seller of the policy, the viatical broker & the buyer of the policy called a provider (investor).

Who buys viatical settlements?

Those who buy viatical settlements are investors called providers who are specialty regulated life insurance companies who buy the policies from the insured.

What is the purpose of a viatical settlement?
The purpose of a viatical settlement is to provide the seller with financial relief and the buyer with profit.
How much do viatical settlements pay?
Viaticals can pay 20-80% of the death benefit or 5 times the surrender value on average (LISA).

Additional Resources

Viatical settlements are a safe option for anyone under the age of 65 or over looking to get money out to their existing policy to help cover the things that matter most. Although a viatical is not for everyone, it’s important to consider all your options to get the help you need. If you have any questions regarding the resources below contact one of our licensed viatical settlement agents.

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“Very helpful and knowledgeable…Highly recommend. No pressure. Kind concerning and outstanding professionalism…”

Ellis P. – FL.

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Viatical Links

Additional Providers

Similar to banks, life settlement providers serve as the funding sources for life settlement transactions. While direct buyers of life insurance policies are regulated, they are not fiduciaries and may not always act in the policy owner’s best interest. Direct buyers may offer a faster sale process than brokers, but sellers should be aware of the risks of not receiving a fair market value for their policy. It’s important to note that the time it takes to complete a single application for one offer from a direct buyer may be the same amount of time it takes to gather multiple offers from a life settlement broker whose duty is the policy owner to ensure they receive the highest offer. Therefore, policy owners should consider working with a reputable broker to ensure they receive the highest value for their policy.

Settlement group
Life Equity
LifeRoc
Institutional Life
Montage
Magna
lifetrust
Q
Habersham
life capital
Fairmarket
Life policy traders
lighthouse
Seven Hills
senior Settlements
SLG

Compare Life Settlement Brokers

Life settlement brokers act as realtors in life insurance policy transactions, working to secure the highest offer for policy owners. These brokers handle all paperwork and streamline the process, saving policy owners time and the headache of negotiating on their own. Brokers receive a commission only if the seller accepts an offer, incentivizing them to secure the highest value for their clients. As a licensed life settlement broker in select states, Bridge provides expert guidance to policy owners seeking the best value for their policy. Additionally, we have vetted and listed other brokers who may serve in states where Bridge is not licensed.
rubicon
lifeforce
ValuLife
Ashar
Asset-Life
Ashar
ValuLife
ALF
Asset-Life
Harbor-Life

Compare Life Settlement Marketing Organizations

Life settlement marketing organizations, or LSMOs, are entities that typically do not hold licenses themselves but work on behalf of a licensed entity to acquire new customers. Their primary goal is to market and promote the services of their partnering licensed entities. Below is a list of LSMOs for your reference.

ValuLife
Coventry
Ovid
In conclusion, when it comes to selling your life insurance policy, working with a reputable life settlement broker can make all the difference. While direct buyers may offer a faster sale process, sellers run the risk of not receiving fair market value for their policy. On the other hand, life settlement brokers act as fiduciaries, representing the best interest of the policy owner and handling all paperwork to ensure a streamlined process. Moreover, brokers can gather multiple offers, allowing policy owners to select the highest value for their policy. At Bridge, we compare life settlement providers, brokers, and marketing organizations to secure the best offer for our clients. Contact us today to learn more about how we can help you get the most value out of your life insurance policy.

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